Abstract

http://ssrn.com/abstract=1787750
 
 

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Analyst Proximity and Earnings Management


Yue Tang


University of Florida - Department of Finance, Insurance and Real Estate

Jin (Ginger) Wu


University of Georgia - Department of Banking and Finance

July 2012


Abstract:     
This paper explores the hypothesis that the geographical proximity of analysts to the firms they cover influences the earnings management of those firms. Using a unique, hand-collected database of analyst locations, we show that firms with a higher level of local analyst coverage manage their earnings less. These firms are less likely to overinvest and make empire-building acquisition bids. They also have better operating performance and lower risks. The results indicate that geographical proximity facilitates analysts’ monitoring by reducing monitoring cost.

Number of Pages in PDF File: 48

Keywords: Analyst geography, Earnings management, Financial analyst, Corporate governance

JEL Classification: G34, M41, G24

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Date posted: March 21, 2011 ; Last revised: September 6, 2012

Suggested Citation

Tang, Yue and Wu, Jin (Ginger), Analyst Proximity and Earnings Management (July 2012). Available at SSRN: http://ssrn.com/abstract=1787750 or http://dx.doi.org/10.2139/ssrn.1787750

Contact Information

Yue Tang
University of Florida - Department of Finance, Insurance and Real Estate ( email )
P.O. Box 117168
Gainesville, FL 32611
United States
352-273-4447 (Phone)
Jin (Ginger) Wu (Contact Author)
University of Georgia - Department of Banking and Finance ( email )
Terry College of Business
Athens, GA 30602-6253
United States
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